Martins View On Using Mortgage Brokers...

dunstonh

The MSE website says that "Yet the Yorkshire Building Society and Britannia don't pay brokers a fee, and while true whole of market brokers should include them in a comparison, they don't have to offer to transact them for you."

That is not correct.

A whole of market broker on commission basis only has to source from commission paying deals.
An independent can source the true whole of market and recommend non commission deals.

when I suggested that I would go to Yorkshire direct he proceeded to suggest that he could process the recommended mortgage quickly, whereas mortgage processing at Yorkshire could be significantly slower. He said he couldn't definitely say that Yorkshire would be slow, but he would be concerned that this might be the case.

brokers often get dedicated teams to deal with their applications which can be quicker than using the branch route. Sometimes the lending criteria can be different with brokers and branches as well. So, there is some truth in there but I cant say whether it is the case or not with Yorkshire.

Which leads to my question - clearly, this is a single unsatisfactory episode with L&C and may not be typical. All brokers will get it wrong sometimes. However, what checks, if any, does MSE do on its recommendations? Was my experience one of the few cases where L&C perform poorly despite a normal high quality service or was my experience typical and do L&C make recommendations based on income for them? Would a potential customer who was less financially aware than me get poor advice without noticing?

L&C have done nothing wrong. They are are commission only whole of market broker. They are not independent. So, you shouldnt expect an independent service. MSE has incorrectly described the whole of market/independent status. That is not L&Cs fault.

payless

To be fair the bit about "direct deals" is missed by the regulators and does not really come up in the WoM/ Indie issue. Only thing is Independent must offer a fee option ( thats fee only, not commission + fee ) ... But that does not mean they will tell you about direct deals.

Some brokers class themselves as independent by offering the fee only option, but make it so expensive that in reality it always done on commission ( often with a smaller fee also taken)

L&C did ( may still do- lost interest in checking it out) say they looked at all deals (inc direct) and made a big deal of it , but from my last review / feedback seems there website and sales script does lead people to look at deals that they process ( ie commission earning) , for example the best buy website defaults to deals they can process. ..

L&C use a tag line on one webpagr:

Some people think that you get what you pay for and that there's no such thing as a free lunch. So they like to pay a broker fee. We beg to differ.

Consumers need to realise that "commission" is a form of payment - I'm not saying it should be demonised,( and commission is better than commission + a fee) but certainly in current market of dual pricing / true independent routes it should not be seen as the free lunch .

Martin said ( in the sponsored bookelt) that if the situation changed ( all deals) he would reconsider recommending them

payless

taken from most recent FSA consultation paper ( today) on Mortgage review ( so not in force, but adds clarity to thinking over a point not currently clear)- basically suggests independent don't need to include "direct deals" but should tell a consumer explicitly whether it will consider direct-only deals.

Also looks like considering dropping the fee option as a requirement of being called independent

villa2010

I was just wandering if someone could give some advice with regards to a mortgage for first time buyers for a part ownership house.
My partner and I have been successfully in an application for a part ownerships house for 25% worth £42500.

We now need to get a mortgage, however we both are in education and we do not have permanent contracts. I have a fixed term contract which I started in September this year, this is for six months. My partner is a variable hour lecture and waitress she also works part time full time. Although we have both been doing the job titles consciously for just under two years

We would be able to have guarantors who are mortgage payment free. We also have a deposit of between 10-15% and have a good credit score rating.
As we both do not have permanent contracts but are in education what do you think the likely hood of us getting a mortgage is and could you recommend any where?

Regards!

split_second

Quibbling wrote: »

When searching for my new mortgage, I did my own search before going to a broker. Because of the recommendation on MSE, the broker I sought to use was London & Country.

The best deal I found was the Yorkshire Building Society. When I talked to the broker from L&C, I provided them with the details of the product I had found in addition to providing the information they required to arrive at their recommendation.

The L&C recommendation was a mortgage with the same conditions and fees as the Yorkshire Building Society, but a higher rate. The MSE website says that "Yet the Yorkshire Building Society and Britannia don't pay brokers a fee, and while true whole of market brokers should include them in a comparison, they don't have to offer to transact them for you." Not only did the particular L&C broker with whom I was dealling not include the Yorkshire in their recommendations, but when I suggested that I would go to Yorkshire direct he proceeded to suggest that he could process the recommended mortgage quickly, whereas mortgage processing at Yorkshire could be significantly slower. He said he couldn't definitely say that Yorkshire would be slow, but he would be concerned that this might be the case.

I also asked for a recommendation for Life Cover, again providing details of the best quote I had already found. The broker recommended a Life Cover product which he suggested provided the requested level of cover at a cost which was 30% lower than the quote I had found. However, when I reviewed the policy providers quote documentation associated with the quote I found that while we had discussed a dual life policy and the brokers cover letter stated that the policy was dual life, the attached quotation from which the policy cost was taken was single life. Needless to say I didn't go any further with London & Country.

Which leads to my question - clearly, this is a single unsatisfactory episode with L&C and may not be typical. All brokers will get it wrong sometimes. However, what checks, if any, does MSE do on its recommendations? Was my experience one of the few cases where L&C perform poorly despite a normal high quality service or was my experience typical and do L&C make recommendations based on income for them? Would a potential customer who was less financially aware than me get poor advice without noticing?

in my opinion you should do your own research AS WELL

my house was a repo, i had a 28 or 30 day deadline (cant remember which), a branch mortgage with my bank would not have been processed in time, and other banks were the same, a broker charged me £300, got my mortgage company (a high street building society with good rates) to process everything quickly, and specifically told me they would do as she asked and i got the house

her insurance quotes were shocking and one company only so i used martin's methods and sorted my own out

i knew nothing about mortgages before, i spoke to people on here, read loads online and spoke to my claims assessor friend about the insurance and i did ok. do not rely on the advice of one person as they are only human beings after all especially if they can make money from what you do.

imo my broker was worth her £300 fee, but i was in circumstances where i could have lost the house purchase without her hurrying the mortgage provider for me

Mr_David_Jones

'Whole of Market' Mortgage Advice, 'Independent' Mortgage Advice, 'Direct Mortgage Deals'.... on and ariston....

I have found easily the best fees from a mortgage broker;

One set fee of say £275, this represents a good and honest wage for any days work! This is charged upfront for independent advice, or taken from the lenders fee to the adviser on completion.

This means that with most lenders and for most mortgage values, the broker will be paying the client money, for their mortgage advice - has to be the best way.

Example;

Whole of Market - If an adviser earns £500 from a mortgage lender, they then return the difference of £225 (£500 - £275 = £225) to the client.

Independent - The same fee of £275 is charged upfront, then the whole £500 is returned to the client. If there is no fee payable from the lender for a direct product, well rest assured that the best mortgage deal was achieved.

This seems easily the fairest way mortgage brokers should charge any fees

Golactico

I was hooked in by the L&C 'no fee' claim reinforced by the MSE recommendation. L&C recommended a 5yr fixed rate for which I applied. I promptly checked the lender's website to find that I could get the same mortgage at 0.01% less by applying direct. I promptly cancelled my L&C application and saved myself circa £300 by applying direct. I had naively assumed that the broker would find the very best deal for me, rather than the best deal + their commission.
the MSE website is all about getting the best possible deal. To most people, it's irrelevant whether it's broker fees or commission - all we want to know is 'will it cost me more than by going direct to the lender'.
I personally feel that MSE are a bit too keen to push L&C. In my experience, anyone with a grasp of mortgage fundamentals and a computer can probably get themselves a better deal by researching the market themselves. However, and without wishing to sound patronising, I can see that brokers have their place for those who are completely clueless about mortgages and how they work, or those who simply don't have the time/can't be bothered with the necessary research.

nat0

can be a really tricky task

often you can't access the track record of a broker and if you can't get a referral it is scary trusting a stranger!

add to this a stranger on commission!

we found this site really useful financialadvisor.co.uk

it is an impartial site which allows you to search for financial advisors and access ratings of other users too

GMS

The best way to find a broker is undoubtedly by word of mouth but this is not always possible. Sites such as the one mentioned will contain a list of advisers but have no track record.

The commission issue seems to be a huge thing for oeople in general, yet the same people are happy to sign up with a 'no win no fee' solicitor who will end up with more in fees than the claimant in many circumstances.

Solicitors are registered with the Law Society and can be checked, in much the same way as a mortgage broker/IFA can be checked on the FSA register.

If commission is a genuine worry then agree a fee with the broker. This is often unliked because the 'Why should I have to pay you a fee' speech comes out. At the end of the day a broker needs paying for the work done so how this is done needs an agreement between the borrower and the broker.

pukkamum

My dh and i want to buy our council house, we have a good credit score and very little debt, a £1000 loan which ends next month and £600 on credit cards between us (on 2 cards).
I have two questions
1/ would we need a deposit even though with our discount we would only need a 75% mortgage.
2/ should we go through a broker or try and arrange a mortgage ourselves, i have been tempted by the brokers which cover solicitors fees etc to be added to the mortgage but worry about fees etc.